Is Infosys a ‘chop shop’?

The debate on protectionism in the US took an ugly turn last week when Charles Schumer, a New York Senator, likened India’s Infosys, an IT giant, to a ‘chop shop’.

What was the Democratic Senator trying to say? A chop shop is a place where stolen cars are dismantled so their parts can be resold. As a description of one of India’s most well-respected companies, the best you can say is that Schumer’s comment was misguided.

Infosys itself has so far declined to comment on the remark, but it has sparked indignation in the Indian press and you don’t need to be one of the Infosys’s fans to feel that it betrayed some ignorance of the company.

Writing from Washington for the Times of India, Chidanand Rajghatta says in today’s newspaper:

The company, like other Indian IT majors such as TCS and Wipro, has created tens of thousands of jobs in the US. Infosys alone has 12,000 employees in the US and many of its employees in India are products of the US education and corporate system.

Anyone who has visited Infosys offices in Bangalore or their training camps in Mysore – both in southern India – would acknowledge that the IT company operates in state of the art premises and employs some of the finest Indian graduates.

India’s high-tech outsourcing and software business generates more than $60bn in export revenues a year and its advocates stress that it has also made a big contribution to India’s development – both economically and socially. David Cameron, the British prime minister, even visited the company during a trip to India last month.

But Senator Schumer was not speaking for the benefit of an Indian audience. He made his comment during a Senate debate on a $600m border security bill that would be funded in part by a hike in visa fees for certain skilled workers. That hike would affect Indian IT companies.

Here’s what Schumer said in full:

The emergency border funds will be paid for by assessing fees on foreign companies known as chop shops that outsource good, high-paying American technology jobs to lower wage, temporary immigrant workers from other countries. These are companies such as Infosys. But it will not affect the high-tech companies such as Intel or Microsoft that play by the rules and recruit workers in America.

Tarring the name of a fine Indian company seems unfair. But then Rajghatta has an explanation:

Such is the pressure on American politicians at a time of economic decline and a shrinking job market that they are lashing out indiscriminately.

Related reading:

India and globalisation, FT Special Report

Global equities macromap

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